4.2 Poverty & Inequality Flashcards
(32 cards)
What is absolute poverty?
A situation where individuals cannot afford to acquire the basic necessities for a healthy & safe existence
- more prevalent in developing countries than developed
What is the world banks 3 main poverty lines?
percentage population living on less than:
- >$2.15
- >$3.65
- >$6.85
What can extreme poverty by described as?
multidimensional
- much more than living on a very low income per capita
What is the projection of poverty globally?
- global poverty has been falling but starting to increase due to pandemic
- decreased poverty is a benefit of globalisation
What is the national poverty headcount ration
the percentage of the population living below the national poverty lines.
- national estimates are based on population weighted subgroups estimates from household surveys.
What things can be indicators of development?
- increased quality of electricity, water, etc.
What is relative poverty
where household income is a certain percentage less than the median household income in this country
- individuals who experience relative poverty may not suffer absolute poverty
- relative poverty is more prevalent when a society has more income inequality
What does the UK define income inequality as
below 60% of the median household income
What was the poverty line as an income in the UK in May 2022
- household income was £2072/month
- this meant that the relative poverty line was any household earning less than £1243.2
What is the composition of UK poverty consist of?
- children
- children of single parents
- pensioners
- low skilled workers/unemployed
-e.g.3mill living on min wage but depend on inheritance, partners earnings etc - disabilities, rely on benefits
Causes of changes to poverty
- unemployment changes
- change in rate of economic growth
- economic development
- fdi
- policies resulting in trade
- gov tax/ benefits
- change in asset prices
- external factors; war climate illness
- life expectance
What is income?
flow of money into a household
What are examples of income
- rent
- wages
- interest
- profit
What is wealth?
stock of assets
Examples of wealth
paintings, inheritance, shares
What is the relationship between income and wealth
Wealth can lead to income
- savings lead to interest
- share capital to dividends
- ownership of second properties lead to rent
- ownership of business leads to profit
What is an acronym that can be used to remember causes of income and wealth inequality in a country?
GAS
What does gas stand for?
- government policies
- asset ownership
- skills
What are the government policies that cause inequality?
- tax
- benefits
- corruption
- inheritance tax
- minimum wage
- policies towards trade union
how does taxation levels cause inequality
- tax tends to be lower for countries with high levels of inequality
- developing countries have a low figure for tax revenue as a % of GDP
How does benefits cause inequality
- social benefits have been cut or not increased with inflation - or in some countries do not exist
- this will cause greater inequality
How is asset ownership a cause of inequality
- generates income
- lack of developed financial markets prevents individuals borrowing to acquire land/ assets.
- so assets tend to be handed down through family or acquired by corrupt governments
How are a lack of skills a cause of inequality
lack of skills causes a decrease in the level of income due to lack of skills/ training
- a country with a poor education system will see greater inequality than one with a good education system
How do wage rates cause income inequality
- min wage is there to improve the equity distribution of income.
- without it, more households would be earning less and inequality would increase
